SUNDAY: MAY 15, 2016
BUSINESS
Roderick T. dela Cruz EDITOR
business@thestandard.com.ph extrastory2000@gmail.com
B1
DUTERTE INHERITS $300-B ECONOMY Presidential candidate Davao Mayor Rodrigo Duterte speaks to supporters during an election campaign rally ahead of the presidential and vice presidential elections. AFP
INVESTORS bought stocks of companies with a strong presence in Mindanao and dumped equities related to liquor and cigarettes last week, as they speculated on the economic platform of Davao City mayor Rodrigo Duterte, who is poised to become the next president. Duterte, a 71-year-old lawyer who caught the imagination of Filipino voters because of his firebrand politics and brash language during the campaign period, cornered around 38 percent of the votes, the highest among five contenders, during the May 9 presidential election and was scheduled to be inaugurated 16th Philippine president on June 30. His general and quick pronouncements about being “leftist” worried investors while his “rape” remarks shocked members of the diplomatic corps. His push for federal form of government and constitutional amendments also raised suspicion among businessmen. Businessmen fear that a policy misstep could derail economic growth and throw thousands of Filipinos out of jobs. Duterte is inheriting an economy that grew nearly tenfold over the past three decades, from $33.1 billion in 1986 to more than $300 billion in terms of nominal gross domestic product today,
as per capita income also increased five times from $591 to over $3,000 over the same period. Philippine population nearly doubled over the past 30 years. Growth became possible as Bangko Sentral ng Pilipinas successfully controlled runaway inflation and tamed the peso-dollar exchange rate, two crucial factors in economic stability. With annual foreign exchange inflows of more than $60 billion in terms of workers’ remittances, business process outsourcing revenues and tourism receipts, the economy now enjoys a balance of payments surplus as well as record gross international reserves. The Philippines is also recognized as the fastest growing real estate and automotive market in the world today. Despite these economic feats that saw the rise of major conglomerates, poverty and hunger remain widespread especially in rural areas. In cities, record vehicle sales
Duterte’s transition team 8-point economic plan seems sane and credible, in sharp contrast to his crass remarks.
and construction of commercial districts resulted in road congestion, as the government failed to convince property developers to construct mass housing in centers of economic activities. Healthcare and education costs have been increasing, as the Aquino administration attempted to privatize public hospitals and state-run universities, while selectively trying to keep the operation of mass rail transit, which is one of the least efficient in the world.
As president, Duterte will be in charge of a government with a record budget of more than P3 trillion to serve 105 million Filipinos. The Philippines also posted an average annual growth of 6.2 percent over the past six years, one of the fastest among emerging economies. Over the next six years, the Philippines is projected to become an uppermiddle-income economy, joining Southeast Asian neighbors Thailand, Malaysia and Indonesia. By 2050, the Philippines is projected to be one of the largest economies on the planet, given its young population, with an average age of 23.5 years today. To calm the anxious business community, Carlos Dominguez, a former agriculture secretary who served as a campaign finance manager of Duterte, unveiled an eightpoint economic agenda. “We will continue and maintain the current macroeconomic policies,” Dominguez said in a televised news briefing from Davao City. Dominguez, an economics graduate, owns a popular hotel in Davao and is Duterte’s childhood friend. He was also a banker and a director in several mining, agriculture and manufacturing companies. Dominguez said the continuation of current macroeconomic policies will be complemented by
reforms in the Bureau of Internal Revenue and the Bureau of Customs. The Duterte administration will also accelerate infrastructure spending to account for 5 percent of the gross domestic product and address major bottlenecks in the public-private-partnership program. The new government will attract more foreign direct investments by addressing restrictive economic provisions in the 1987 Constitution and follow the economic model in Davao City. “We will use Davao City model where licenses for doing business are given the shortest possible time,” Dominguez said. It will pursue a genuine agricultural development strategy that provides support services to small farmers to increase productivity, improve market access and develop agricultural value chain by forging partnership with agribusiness firms. “It means we are going to encourage more agriculture processing. This is a rural development strategy, not just an agricultural strategy,” Dominguez said. Dominguez said the Duterte administration will address the bottlenecks in land administration and management system by ensuring security of land tenure to encourage investments and make proj-
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